IMF up­beat as global econ­omy en­joys a growth spurt

Tehran Times - - ECONOMY -

The world econ­omy is en­joy­ing its most wide­spread and fastest growth spurt since a tem­po­rary bounce back from the global re­ces­sion in 2010, the In­ter­na­tional Mone­tary Fund said on Tues­day, as it re­leased a series of up­ward re­vi­sions to its eco­nomic fore­casts.

In a rare up­beat World Eco­nomic Out­look, pub­lished at the start of the an­nual meet­ings of the IMF and World Bank in Wash­ing­ton, the fund added that the un­ex­pect­edly good news had fur­ther to run in 2018 and higher in­vest­ment was also be­gin­ning to im­prove the longer-term eco­nomic prog­no­sis.

The last time the global econ­omy grew so fast was in 2010 as the world econ­omy staged a tem­po­rary re­cov­ery from the 2008-09 fi­nan­cial cri­sis, so this year’s per­for­mance was sig­nif­i­cantly stronger, ac­cord­ing to Mau­rice Ob­st­feld, chief econ­o­mist of the IMF.

“This is not bounce back from a sharp de­cel­er­a­tion, this is an ac­cel­er­a­tion from the fairly tepid growth rates of re­cent years, so that’s re­ally good news,” he told the FT in an in­ter­view ahead of the report’s pub­li­ca­tion.

The IMF es­ti­mates that the world econ­omy will ex­pand 3.6 per cent in 2017, up from 3.2 per cent recorded last year, and it is likely to grow 3.7 per cent in 2018, the IMF pre­dicted. These growth rates are bet­ter than the norm for this decade and fi­nally back to the long-term av­er­age of the past 30 years.

The up­graded growth fore­casts came along­side pre­dic­tions of low in­fla­tion across the world, help­ing to boost house­hold in­comes, a con­tin­u­a­tion of loose mone­tary policies and an end to fis­cal aus­ter­ity in most coun­tries, the IMF said.

China’s econ­omy is also per­form­ing bet­ter than ex­pected on the back of easy credit and co­pi­ous public in­vest­ment. The fore­casts for the US were cut marginally, re­flect­ing a weak first quar­ter of this year and the fund’s view that a large fis­cal stim­u­lus is now less likely than it thought in April.

The most sig­nif­i­cant up­grades to the fund’s fore­casts were recorded for the eurozone, which is ac­cel­er­at­ing strongly as con­fi­dence has im­proved and credit sup­ply has re­turned to nor­mal.

De­spite the strength of its largest trad­ing part­ner, the UK econ­omy is de­scribed as an “ex­cep­tion” to the im­proved 2017 out­look, with its prospects cur­rently sad­dled by Brexit un­cer­tain­ties lim­it­ing spend­ing and hit­ting in­comes.

Although the re­cov­ery was now broad, not all coun­tries were en­joy­ing the ben­e­fit, with some smaller emerg­ing economies, par­tic­u­larly fuel ex­porters and na­tions suf­fer­ing from drought or po­lit­i­cal in­sta­bil­ity.

Mr Ob­st­feld said: “In 2017 nearly a quar­ter of emerg­ing mar­ket and de­vel­op­ing coun­tries are ex­pected to have neg­a­tive per-capita growth rates so that’s a sober­ing out­look.”

Global trade im­bal­ances have also con­tin­ued to re­duce in sever­ity with China’s trade sur­plus fall­ing as the world’s largest econ­omy sucks in more im­ports and some Euro­pean sur­pluses de­cline as do­mes­tic spend­ing also in­creases.

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